Data shows that Tier 1 price growth reflects a surge in unique addresses

At that time of the year again, when Tier 1 tokens and other cryptocurrencies rose, Bitcoin seemed to be stuck in a never-ending range. The cryptocurrency market ended with substantial profits in 2021, but it did not shine as well as everyone expected.

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Due to full adoption in 2021, Arcane Research has recorded significant growth in Tier 1 tokens such as Fantom (FTM) and Avalanche (AVAX). These cryptocurrencies have risen more than 15 times against Ethereum (ETH) and have taken up part of its market share.

Arcane Research claims that the increase in decentralized finance (DeFi), non-fungible tokens (NFT) and Ethereum network transaction fees is becoming more and more popular. The latter phenomenon began in the “DeFi Summer” in 2020, when the number of DeFi users surged, leading to an increase in network usage.

Proliferation of NFT Contributed to this issue and allowed Tier 1 tokens such as Binance Smart Chain (BSC) and Solana (SOL), And others join users who are priced beyond Ethereum. The same thing seems to happen to Fantom and Avalanche. Arcane Research claims the following:

As shown in the chart, the more users of a particular protocol, the greater the value it often gets. In other words, the assumption that altcoins have risen too much and a bear market has lurked for many years requires some nuance.

Source: Arcane Research

The explosive growth of these Tier 1 tokens may follow similar to those of cryptocurrencies that benefit in the short term, but their usage base has dropped significantly, or users can form communities and become permanent contributors as they expand. In this sense, implementing a second-layer scalability solution for Ethereum may pose a threat to these projects.

Multi-chain industry supported by the first layer of cryptocurrency

independent Report Delphi Digital recorded significant growth in other Tier 1 projects in 2021. Terra (LUNA) is one of the most important items in these terms, and Polygon (MATIC) is a scalable platform for the Ethereum ecosystem.

In terms of total value lock-in (TVL), Terra has grown 356 times, while Polygon increased 17,100 times In its TVL. As shown below, Fantom and Avalanche have entered the top 10 blockchains in TVL, but the increase is smaller than the aforementioned cryptocurrencies.

Layer 1 avax eth ftm
Source: Delphi Digital via Twitter

Despite high transaction fees and congestion issues, Ethereum will still be the largest network in TVL in 2021 and will temporarily maintain its dominant position. When analyzing the largest protocols through TVL, it is interesting to find that Lido Finance and Multichain, as Delphi Digital claims, these two platforms have interoperability and cross-chain capabilities.

This may imply that in the future, Ethereum and Tier 1 tokens will find themselves in an equal field, as users turn to the latter to find more cost-effective ecosystems and cross-chain functions.

Related Reading | TA: Ethereum plummeted after being rejected: technically still bullish

As of press time, the ETH transaction price was US$3,811, a 1% drop in the past day.

Level 1 eth avax ftm
ETH is trading sideways on the 4-hour chart. source: ETHUSD transaction view

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